TimesofMoney, the digital payments service provider from BCCL (the Times of India group), has applied to the Reserve Bank Of India (RBI) for a Payment Service Provider license. Avijit Nanda, President, TimesOfMoney, told MediaNama that the company intends to offer prepaid payment services via a stored value card, on the lines of existing cash cards. Those approved will be licensed prepaid service providers, governed under the Department of Payment Systems under the Payment Settlement Systems Act.
TimesOfMoney offers Times Card, a co-branded card in association with Barclays; Remit2India and Remit2Home, money remittance services; DirecPay, a payment gateway service; and retail shopping site Window2India. The company had launched an online wallet service Wallet365 three years ago, only for it to be stopped by the RBI. Excerpts from our interview with Nanda:
What is the status of Wallet365? How is it affected by the prepaid systems guidelines?
Wallet365 is a product that we want to get back to, and fortunately now that the guidelines are there, we have put in an application. The final set of prepaid instrument guidelines has clearly defined the playing rules: They’ve said that open loop systems are restricted to banks at this point in time, wherein one can withdraw cash from a bank and ATM, and there’s no need for a one-to-one relationship between bank and merchant.
For the closed loop system, there’s a service provider and a closed loop user merchant ecosystem, and a one-to-one relationship; there is no withdrawal of cash across the system, but you can have a merchant ecosystem that you can sign up with. It’s a prepaid instrument from which you can’t withdraw cash. You can’t run it over a Visa or Mastercard network as well, so you have to create your own closed loop settlement system there.
That fits into what we are planning to do with Wallet365. We will have our own closed ecosystem of merchants who we will sign up with, within the regulatory construct. We will offer Online as a channel and as and when mobile becomes allowed by regulation, we will offer it as a channel.
But then it wont be like Paypal, since you can’t withdraw cash.
At this point in time the guidelines don’t allow it, but I’m hoping that in the future, as adoption increases and service providers show that confidence to the RBI, and the guidelines will evolve to allow it.
You’ve had the mobile product ready for Wallet365 for three years now…
Yes, but that was an SMS based protocol that we had launched then. We didn’t go to the market with it, because we were asked to withdraw before we could. We’ve moved beyond that because SMS is not necessarily the most secure environment. We will offer something which is a combination with SMS and IVR. A messaging string can be initiated in the form of an SMS, but it needs to be authenticated in the form of an IVR.
Those are infrastructure companies. We haven’t announced a product primarily because the regulations are fuzzy there: the guidelines issued last year were only for banks. You can become an infrastructure company and offer it to a bank, and thats where your play gets restricted. The solutions that you’re talking about are solutions that have been offered by banks to customers.
We want to be in a product where we would like to own as much of the ecosystem as possible, and that is why we are waiting for definite guidelines. As and when those are available, we will offer mobile solutions both in the domestic and cross border play. We will own the customer, the service will be ours, and we will also own the infrastructure and the merchant ecosystem. The values of commerce will be with us, with a bank agnostic and operator agnostic solution.
How has your experience been with DirecPay?
It’s been 8 months since we launched DirecPay: the strategy was to go to merchants online, and allow us to leverage our existing banks gateway relationships. We’ve moved on from being a credit card gateway, with 8 bank direct debit pipes, to a full fledged suite of 24 banks with direct debits, which is the ability to pay directly out of the bank accounts. From a products capability perspective, it’s a wholesale single play, plugin solution for e-commerce merchants. We are going to be looking at combining that with the stored value card product, once it is allowed.
But you entered the market rather late. How are you competing with established players with CC Avenues and ABC Payments?
For us, us coming in late meant that we didn’t come in with legacy system capability. We were flexible in structuring the architecture of the solution to the need of the merchant – from single pass-through solutions, with no intermediate page between a checkout page and the gateway. Google, for instance, uses us, and we did a significant customization based on what experience they wanted to give their Adwords customers.
We don’t go in for the mass volume merchants, because value is driven from 30-40% of merchants today. We have an ecosystem of around 500 merchants at present. What we want to do is move away from the price play and move to a value add play. It’s not just Internet, for instance. We’re trying to see how we can offer IVR, so we can get offline merchants, direct marketing solutions, home delivery solutions also plugged into it.
How would that work?
Instead of giving a checkout page on the Internet, we offer a shop on the IVR, where a merchant could list a product on an IVR portal. The customer consumer buys on the IVR and pays out of a solution like ours. We plug our DirecPay application there on the IVR, and we’re able to accept payments authorized through either speech recognition or DTMF keys. This will be independent of mobile operator billing, and give the merchant to collect money out of the bank account or credit card.
What’s the ratio of the credit card payments to netbanking? Are you limited by the credit card penetration?
It’s still 80% cards and 20% netbanking. To an extent, yes, we are limited by cards, but it’s a question of behaviour, and what you are getting exposed to. If it’s a credit card, you’re exposing your credit limit, at worst. In comparison, if you’re paying from your bank account, the perception is that should something go wrong, you’re exposing your bank account. The infinite exposure is a challenge for the commerce industry.
What was the impact of the extra level of security that was mandated earlier this year?
Initially there was a little bit of an issue, but that was more about people trying to understand what the protocol was about. I think most of the banks got pushed into it in a little bit of a hurry, and there wasn’t too much of consumer awareness created around the benefits of multi-factor authentication. Initially there was a little dip from an industry perspective, but after that it settled down. We were already offering a 3D secure gateway, with multi-factor security offered to customer.